Legislature(2003 - 2004)
03/13/2003 03:20 PM House O&G
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
March 13, 2003
3:20 p.m.
MEMBERS PRESENT
Representative Vic Kohring, Chair
Representative Hugh Fate
Representative Jim Holm
Representative Lesil McGuire
Representative Norman Rokeberg
Representative Harry Crawford
Representative Beth Kerttula
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Jim Holm
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 12
Expressing support for federal energy initiatives affecting
Alaska that would reduce the nation's continuing dependence on
imported foreign oil as its principal energy source.
- HEARD AND HELD
PREVIOUS ACTION
BILL: HJR 12
SHORT TITLE:SUPPORTING FEDERAL ENERGY INITIATIVES
SPONSOR(S): REPRESENTATIVE(S)CRAWFORD
Jrn-Date Jrn-Page Action
03/05/03 0395 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0395 (H) O&G, RES
03/05/03 0395 (H) REFERRED TO OIL & GAS
03/13/03 (H) O&G AT 3:15 PM CAPITOL 124
WITNESS REGISTER
JAY HARDENBROOK, Staff
to Representative Harry Crawford
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to HJR 12.
ACTION NARRATIVE
TAPE 03-15, SIDE A
Number 0001
CHAIR VIC KOHRING called the House Special Committee on Oil and
Gas meeting to order at 3:20 p.m. Representatives Kohring,
Chenault, McGuire, and Crawford were present at the call to
order. Representatives Rokeberg, Fate, and Kerttula arrived as
the meeting was in progress. Also present was Representative
Holm.
HJR 12-SUPPORTING FEDERAL ENERGY INITIATIVES
CHAIR KOHRING announced that the committee would hear HOUSE
JOINT RESOLUTION NO. 12, Expressing support for federal energy
initiatives affecting Alaska that would reduce the nation's
continuing dependence on imported foreign oil as its principal
energy source.
Number 0065
REPRESENTATIVE CRAWFORD, sponsor, characterized HJR 12 as an
"energy independence resolution." He explained his belief that
because 55 percent of oil in the U.S. comes from outside of
North America, it has skewed a number of things including
foreign policy and pricing. He said he'd like a 10-year plan -
much like President John F. Kennedy's 10-year plan to put a man
on the moon - to get America to the point of energy
independence, and said he believes Alaska holds the key.
Number 0185
CHAIR KOHRING commended this as a good thing. Referring to
Representative Crawford's point that Alaska is key as far as
energy-independence potential in the U.S., he said this is with
regard to not only oil and gas, but also geothermal [energy] and
coal. He noted that research provided by Representative
Crawford mentions 5.5 trillion tons of coal.
REPRESENTATIVE CRAWFORD clarified that the approximately 5
trillion tons is projected, but provided the figure of 170
billion tons of coal in proven reserves.
Number 0334
CHAIR KOHRING indicated the resolution is to be sent to Gale
Norton, Secretary of the Interior, and to the President [in
addition to several others]. He asked Representative Crawford,
if it were to be promoted aggressively, what he would suggest
legislatively such as incentives to encourage development of
these different areas of potential [energy resources].
REPRESENTATIVE CRAWFORD answered that before the Alaska Science
and Technology Foundation (ASTF) was scheduled for demise, he'd
had other legislation for introduction. Indicating the desire
to wait to see what happens to ASTF, he said he'd talked to its
new director about public and private partnerships and how to
promote this.
Number 0398
REPRESENTATIVE McGUIRE encouraged introduction of the other
legislation. She suggested the bill should be part of the
public policy discussion with respect to removing [ASTF's]
endowment of close to a billion dollars.
REPRESENTATIVE CRAWFORD reported that the new director [of ASTF]
had asked that the legislation be held back for a little time.
He reiterated his belief that Alaska holds the key to changing
America's energy picture.
The committee took an at-ease from 3:25 p.m. to 3:27 p.m.
Number 0529
CHAIR KOHRING lauded the concept of promoting energy
[independence] and added his belief that one reason the U.S. is
involved so heavily in the Middle East is because of not wanting
to disrupt the flow of oil. In addition, he said, developing
resources within the U.S. could help grow the economy.
REPRESENTATIVE CRAWFORD suggested it would benefit all of North
America because the U.S. is part of the North American Free
Trade Agreement (NAFTA) and thus is in partnership with Canada
and Mexico.
CHAIR KOHRING agreed.
Number 0624
CHAIR KOHRING suggested this resolution mirrors what President
Bush announced two years ago with regard to greater energy
independence and looking at developing coal, oil, gas, and
alternative sources. He asked whether that is correct.
REPRESENTATIVE CRAWFORD said it is, but pointed out that
hydrogen is a new field. He likened it to a big battery, a way
to store alternative energy and ship it worldwide. He opined
that Alaska has the best potential of anywhere in the world to
produce hydrogen because of all the alternative energy sources
available, including wind, water, tidal power, and geothermal
power; furthermore, those sources are at [tidewater] and thus
shipping hydrogen in tankers all around the world can be done
cheaply and safely. He pointed out that a wrecked tanker filled
with hydrogen wouldn't cause a huge environmental disaster like
a tanker full of oil would.
Number 0732
CHAIR KOHRING asked whether hydrogen is shipped currently or is
being developed at all in the world.
REPRESENTATIVE CRAWFORD replied that it's being done to a small
extent today, and is used in many products. He emphasized his
belief that hydrogen is the fuel of the future, but pointed out
that the problem until now has been producing it cheaply. He
said producing hydrogen by using fossil fuels such as natural
gas or oil - because of insufficient return in BTUs [British
thermal units] - isn't that efficient, although coal could be
used efficiently. Wind, water, and geothermal power, however,
can be used where the energy is produced, such as at Akutan on
the Aleutian Peninsula, where there are huge geothermal
potentials; at Knik Arm or Turnagain Arm, where there is good
tidal power; at Fire Island outside of Anchorage, where there is
a desire to put 70 megawatts of wind power; or at Turnagain Arm,
where there is a desire to put 10 to 20 megawatts of wind power
on Bird Ridge, to his belief.
Number 0885
CHAIR KOHRING expressed interest in [having the committee] work
on legislation to encourage development like that through tax
incentives or streamlined regulation and permitting, for
instance.
REPRESENTATIVE CRAWFORD remarked that certainly Chugach
[Electric Association, Inc.] could use help with its wind farm
at Fire Island, which is in its infancy. Suggesting the
legislature could help foster this, he noted that just putting
in 70 megawatts of power at Fire Island wouldn't be that
efficient because there would be high winds sometimes, but no
wind sometimes at peak hours when it's needed. Excess energy
turned into hydrogen could be stored, however, and thus would be
used most efficiently.
The committee took an at-ease at 3:31 p.m. that lasted only a
few seconds.
Number 0987
REPRESENTATIVE CRAWFORD addressed his handout, "North American
Energy Independence: Alaska's Resources and How They Can Free
America From Dependence on Foreign Oil." Turning to the first
page, "Alaska's Role in Energy Independence," he said Alaska has
the potential to be the backbone of an energy-independence plan
for the continent. Referring to a depiction of a battery
superimposed on Alaska, he explained that it shows Alaska as a
big storage house for America's energy.
REPRESENTATIVE CRAWFORD referred to the next page, "National
Security," and said currently the U.S. imports more than 55
percent of its oil from foreign sources, with almost 45 percent
coming from the Middle East. This dependence on foreign oil has
put U.S. military personnel in harm's way, and has subjected the
U.S. market to large price fluctuations in oil and natural gas;
essentially, the U.S. purchases hydrocarbons from the same
people who threaten the lives of U.S. citizens.
REPRESENTATIVE CRAWFORD addressed the next two pages, "Oil and
Gas Development" and "Coal." He said that NPR-A [National
Petroleum Reserve-Alaska] and ANWR [Arctic National Wildlife
Refuge] have the potential to produce over 20 billion barrels of
oil collectively; that a proven 30 trillion cubic feet of
natural gas is stranded on the North Slope; and that in coal bed
methane alone, Alaska has an estimated 1,000 trillion cubic feet
of natural gas. Noting that coal is just one of Alaska's many
underutilized resources, he reported that Alaska has proven
reserves of 170 billion tons of coal, with an estimated 5.5
trillion tons - half of the U.S. reserves - all in one state.
Number 1146
REPRESENTATIVE CRAWFORD turned to the next two pages, both
labeled "Hydrogen." He explained that hydrogen is believed to
be the fuel of the future for the automobile; in many areas of
the world, that could be true for power plants as well. It can
be used to power fuel cells that produce electricity, with the
only byproduct being water; it also can be used to make clean
diesel through the gas-to-liquids (GTL) process. Essentially,
hydrogen is a means to deliver energy from one point on the
earth to another without constructing power lines or pipelines.
Thus hydrogen is the way that Alaska can deliver its energy
throughout North America.
REPRESENTATIVE CRAWFORD addressed the next-to-last page, "The
University of Alaska." He told members that using the
incredible research facilities and human resources at the
University of Alaska and Alaska's vast energy resources, North
American energy independence could become a reality. Turning to
the final page, which discussed HJR 12 specifically, he
concluded by noting that it [urges Congress, the President, and
members of his cabinet] to do the following: 1) open more areas
in North America for oil and gas exploration and development; 2)
provide reasonable incentives for an Alaska natural gas
pipeline; 3) develop reasonable energy-efficiency standards for
the U.S.; and 4) develop a 10-year plan for North American
energy independence.
Number 1261
CHAIR KOHRING asked how hydrogen would be delivered from one
point to another.
REPRESENTATIVE CRAWFORD replied that hydrogen can be safely
transported by bonding the molecules with zeolite, a mineral
found in abundance in Alaska. He pointed out that an acetylene
canister that lacks a carbon "honeycomb" inside would be a bomb,
but the carbon honeycomb causes the acetylene to bond with the
carbon and makes it safe to transport. Similarly, hydrogen can
be transported safely in a tanker as long as the zeolite is
there. He suggested this would provide another industry for
Alaska in addition to mining the zeolite.
Number 1368
CHAIR KOHRING asked about the downside with regard to safety or
the environment.
REPRESENTATIVE CRAWFORD replied that he'd heard of only two
negative aspects. First, hydrogen requires care - though the
same is true of gasoline or natural gas. Second, it hasn't been
used as a fuel thus far because the [monetary] return isn't
sufficient if it requires natural gas to produce. However,
geothermal power, wind, water, or other renewable resources
don't have a "meter" and thus are the way to produce hydrogen
cheaply.
Number 1434
REPRESENTATIVE FATE complimented Representative Crawford on
HJR 12, which he said he could support if there were
modifications. He agreed that hydrogen will become the fuel of
the future, especially for automobiles and perhaps even trains,
but suggested it will be awhile because of the cost, even though
wind or other cheap power sources may help produce it.
Number 1547
REPRESENTATIVE FATE offered specific comments on HJR 12.
Referring to the first "WHEREAS" clause [page 1, lines 4-6], he
explained that he wouldn't want the state to send a resolution
that directs the U.S. government to "interfere with their
efforts" with regard to human rights. He also suggested that
the second ["WHEREAS" clause, page 1, lines 7-8, implies] that
foreign oil has put the armed services in harm's way.
Disagreeing with that concept, he added that if it is true, it
certainly isn't the only reason.
REPRESENTATIVE FATE called attention to [page 1, lines 15-16],
which mentions potential for [oil and] gas development in the
coastal plain of ANWR and NPR-A. He said there is a high
potential for gas in NPR-A; for oil, however, it has yet to be
seen through the necessary seismic work.
Number 1680
REPRESENTATIVE FATE referred to [page 2, lines 1-3]. He
remarked that whereas some people say [the amount of stranded
gas on the North Slope] is 30 trillion cubic feet [as cited in
HJR 12], some say 33 trillion or 35 trillion; he suggested it
isn't worth quibbling about, however. He also suggested
deleting "Northern Canada" [on line 3]; he questioned the merit
of including Canada, since its gas competes with Alaska's.
REPRESENTATIVE FATE reiterated that although he absolutely
believes in the future of hydrogen power, the [costs versus
benefits] don't measure out yet. He remarked that steam can be
generated by using natural gas, which the state has plenty of;
however, whether it could be done efficiently - in comparison
with what the gas itself could be sold for - needs to be looked
at. Referring to page 2, line 18, which talks about developing
[resources] on the North American continent, he indicated this
goes back to his concern about including Canada.
Number 1839
REPRESENTATIVE FATE mentioned an ongoing effort in federal
legislation [that hadn't yet passed] with respect to producing
energy standards.
REPRESENTATIVE CRAWFORD responded, "That's why we said
'reasonable'."
REPRESENTATIVE FATE also suggested striking "10-year" where it
says "10-year plan". He explained, "Let the people who come up
with an energy plan determine that. And 10 years may fall way
short. It takes 10 years, for example, to probably get the gas
pipeline on line here. And they understand that; they've been
working on this for several years." Reiterating his absolute
support for HJR 12 if the foregoing changes are made, he again
commended the sponsor.
CHAIR KOHRING also commended Representative Crawford. He
proposed that Representatives Fate and Crawford work together to
improve the bill.
Number 1968
REPRESENTATIVE CRAWFORD agreed to work with members in order to
get acceptable wording. Responding to Representative Fate's
suggestions, he said one main reason for HJR 12 was to try to
move the federal government in this direction as quickly as
possible; the 10 years is included to give the federal
government a "boost." He acknowledged that if it were binding
law, it would be done differently. As for putting troops in
harm's way, he offered his belief that "this has made us expend
a lot of our national energy on protecting the oil routes in the
Middle East that we might not be [protecting] if we weren't so
dependent on foreign oil."
Number 2095
REPRESENTATIVE CRAWFORD, in response to questions from
Representative Rokeberg, explained that electricity is needed to
[produce hydrogen from water]. Alaska has geothermal resources
for which there is no market. He noted that New Zealand obtains
its electricity from geothermal power, for example. Although
there is no market for [something similar] on the island of
Akutan, those geothermal resources can be used to produce
hydrogen from seawater; the hydrogen then can be exported around
the world. Similarly, the 70 megawatts of wind power on Fire
Island or tidal power in Knik Arm or Turnagain Arm, for example,
could be used to produce hydrogen, which is a way to store the
excess energy.
REPRESENTATIVE CRAWFORD reported that ASTF's new director said
hydrogen can be produced using coal if excess electricity is
produced beyond that required for other needs. Furthermore,
this can be done in areas of Alaska where there are [few] people
and no need today for a power plant otherwise. Representative
Crawford noted that General Motors has a hydrogen-run car and
that Honda has had one ready for production for about a year.
He offered his belief that this is close to fruition, rather
than being 20 years away.
Number 2347
REPRESENTATIVE ROKEBERG said he shared Representative Fate's
concerns about the technology for hydrogen conversion and costs;
he also expressed concern about creating a distribution system
for the retail marketing of hydrogen. He inquired about the BTU
value of hydrogen.
Number 2401
JAY HARDENBROOK, Staff to Representative Harry Crawford, Alaska
State Legislature, said it depends on how it is used. When
hydrogen is used for fuel cells, it basically becomes a battery
and the BTU level is similar to natural gas. Essentially, he
said, it is natural gas that also can be used in fuel cells.
REPRESENTATIVE ROKEBERG observed that hydroelectric power hadn't
been mentioned. He then asked whether generating hydrogen goes
against the short-term interests of Alaskans to produce oil and
gas [because of royalties].
REPRESENTATIVE CRAWFORD answered that if the 55 percent of oil
that comes from foreign countries were cut off, there would be a
shortage of energy in the United States; he suggested this would
make hydrogen an essential part of the country's energy supply.
He noted that there is a fuel cell operating at the airport post
office [in Anchorage] that is a clean source of electricity
there; he suggested this could be done all over Alaska without
the need for diesel generators.
Number 2573
REPRESENTATIVE FATE emphasized the high cost of current
hydrogen-run automobiles. He then remarked that the Stone Age
didn't end because of lack of stone; neither will the
hydrocarbon age end because of lack of hydrocarbons. However,
as long as cheap, efficient hydrocarbons can be used - which is
the case for gas - it will remain. He reiterated his belief
that the transition from gas technology in the United States to
hydrogen will occur later, rather than sooner, because there is
so much gas available at such a cheap price.
Number 2727
REPRESENTATIVE CRAWFORD responded that the point of the
resolution is to stop using imported hydrocarbons from the
Middle East and elsewhere, and instead to use [Alaska's]
resources - whatever are the most efficient at the time. Saying
that gas is, by far, the best fuel available, he related his
belief that [dependence on fuels from elsewhere] skews the
country's foreign policy, currency, and business climate. He
emphasized the desire to use North American sources of fuel as
quickly as possible, thereby getting away from using foreign
fuel and energy.
REPRESENTATIVE FATE said he concurred with that effort, but
noted that Representative Crawford had highlighted geothermal
[and other renewable sources of energy]. He reiterated that
those won't [be used extensively] for a long time because of the
large quantities of natural gas available.
Number 2861
MR. HARDENBROOK pointed out that a cost benefit of hydrogen is
that it's already at tidewater, in contrast to natural gas on
the North Slope. All that is necessary is a power plant and an
electrolysis plant; then hydrogen can be shipped using a zeolite
tanker directly to the West Coast. He suggested there would be
a cost savings, therefore, since it can be used as a natural
gas. That is why it is highlighted in the resolution, he said,
rather than to displace other [North American] hydrocarbons.
CHAIR KOHRING noted that the emphasis of the bill is to
encourage energy [independence], but said Representative Fate's
comments are well taken. Asking that Representatives Crawford
and Fate work on it, he offered to facilitate the work as well.
[HJR 12 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at
4:09 p.m.
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